Trading analysis

EUR/USD (a 4-hour chart)

Positive data raised expectations that the U.S. Federal Reserve will curtail its program of quantitative easing.

Retail sales excluding autos, rose 0.5% in July, the largest growth for the year. Overall, retail sales rose 0.2% for the month, less than forecast. However, the growth is taking place for the 4th consecutive month.

The growth of the U.S. economy means that the Federal Reserve will curtail the incentive program, which weakens the dollar.

The index of the dollar Wall Street Journal, showing the dollar's value against a basket of major currencies, rose to 74.007 from 73.609.

Euro continued to fall and is trading near 1.3257 against the U.S. dollar now. The single currency may seek lower lows, if the German economic data come out worse than expected. The euro/dollar was trading at 1.3262 against 1.3300 on Monday.

The British pound continued to fall, touching the 1.5430 level against the U.S. dollar. The British economy today will pass another test, this time - on the condition of the market. Yesterday, at one time, the British currency grew and then fell after the publication of inflation data, which were slightly higher than the forecast. Increase in inflation occurred after the Bank of England said last week that the bank would keep interest rates low for as long as the unemployment rate falls below 7%, but under the condition that inflation will remain subdued. The pair GBP/USD was being traded at 1.5448 against 1.5462 late Monday.

The U.S. dollar rose, touching the week high 98.33 against the Japanese yen against 96.91. The yen weakened after Japan's Nikkei newspaper reported that Japanese Prime Minister Shinzo Abe would consider lowering corporate taxes to offset the effects of the planned increase of the sales tax.

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